Fitness First owner Whelan plots rent cuts in showdown with landlords | Business News
The UK-based health club chain is plotting a monetary restructuring that may contain various health club closures and steep rent cuts, Sky News learns.
By Mark Kleinman, City editor @MarkKleinmanSky
The sportswear tycoon Dave Whelan is heading for a showdown with landlords over plans for an overhaul of his Fitness First gyms empire that may contain web site closures and steep rent cuts.
Sky News has learnt that Mr Whelan, best-known as the previous owner of Wigan Athletic Football Club, is working with advisers on a restructuring plan for the well being golf equipment chain he purchased in 2016.
Property business sources stated this weekend that the proposals may very well be formally unveiled as quickly as subsequent month.
One landlord stated they anticipated that roughly 1 / 4 of Fitness First’s roughly 45 UK golf equipment may very well be earmarked for closure.
Another probably affected property-owner stated they anticipated Mr Whelan’s group to hunt rent reductions of as a lot as 90% throughout a few of its remaining gyms.
According to probably the most not too long ago filed accounts for Fitness First Clubs, the corporate misplaced greater than £10m in the yr to 31 March 2021, though its efficiency throughout that interval was hammered by the pandemic.
Its accounts for the next yr at the moment are almost a month overdue.
The bulk of Fitness First’s operations are in London, with golf equipment in outstanding areas akin to Oxford Circus, Baker Street and Liverpool Street.
Filings present that earlier this month, Teneo Financial Advisory was appointed administrator to Fitness First (Curzons) Limited, an organization affiliated to the broader group.
Further particulars of Mr Whelan’s proposals have been unclear this weekend, whereas the impression on jobs on the firm because of potential health club closures might additionally not be ascertained.
The tycoon, who based JJB Sports, which turned one in all Britain’s greatest excessive avenue sporting items retailers, acquired a big chunk of Fitness First’s UK operations seven years in the past as a part of a separate restructuring of the multinational gyms operator.
Under completely different possession, Fitness First had beforehand shed dozens of struggling UK golf equipment via a mechanism referred to as an organization voluntary association in 2013.
The use of a restructuring plan moderately than a CVA to implement its newest overhaul might show controversial amongst affected landlords.
Virgin Active, one other gyms group, deployed a restructuring plan to pressure via a monetary restructuring in 2021 because it teetered getting ready to collapse.
The mechanism permits firms to ‘cram down’ collectors to pressure proposals via even when they vote towards them.
Mr Whelan himself has additionally skilled the sharp finish of the well being and health sector as competitors has grown, notably amongst cheaper operators.
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In 2020, DW Sports, the chain he based in 2009 after buying 50 websites from JJB Sports, crashed into administration, citing the impression of COVID-19 lockdowns.
Roughly half of the corporate’s 1,700-strong workforce was saved when Mr Whelan’s rival, the Sports Direct tycoon Mike Ashley, engineered a deal for his Frasers Group to purchase simply over half of DW Sports’ websites.
The gyms business has confronted extraordinary turbulence in current years, with the pandemic and hovering vitality prices having a marked impression on operators’ capacity to earn cash.
The Gym Group, a London-listed chain, has seen its shares halve over the past yr, and it now has a market capitalisation of simply £185m.
Mr Whelan couldn’t be reached for remark, whereas Fitness First didn’t reply to a collection of emailed requests for remark despatched on Friday and Saturday.
